Peru - a Business Expansion Opportunity

PERU - A BUSINESS EXPANSION OPPORTUNITY

INTRODUCTION

Our current company operates in a competitive business environment and provides state and local Business Consulting and Auditing service for every type of business practice. We offer business owners the following types of services: strategic planning, business development, financial projections, business restructuring, mergers and acquisitions, internal financial statements audit, and review regulatory compliance into other markets. Our goals as a Business Consulting and Auditing Firm is to work together with other businesses to help plan and execute improvements in their business process and maintain profitability.

Our Strategic Management Team has asked that I research and analyze data for a recommendation of an overseas country for our firm to expand our business practice to. In my research I have decided to recommend the South American Country of Peru for expansion. In preparing and researching this report my recommendation for expanding to Peru is based on factors of economic growth, increasing foreign and domestic investments, promising trade agreements, and beneficial employment conditions. This presents our firm with a great opportunity for growing our business practice and establishing ourselves as an international operation.

GROWING ECONOMIC SYSTEM

In February 2013 the International Monetary Fund's (IMF) 24 -member Executive Board has said that Peru has emerged as one of the fastest growing and most stable economies in Latin America (Vera and Ching, 2013). Research shows that in the period between 2002 and 2012 the Peruvian economy has almost doubled in size. (Figure 1.1) Despite the current global economic crisis Peru's economy has remained very strong and resilient in both their domestic and international markets. For the year of 2013, real GDP growth is expected to remain around 6 1/2 percent and inflation is expected to continue to fall (Vera and Ching).

Figure 1.1

Another economical strength throughout the country is coming from banking institutions who are riding Peru's buoyant economy. There are several factors that favor the growth of business lending opportunities in Peru. These include a strong domestic product (GDP), investment outlooks, an under banked population, and fast growing capital markets. Due to low levels of bankarization - defined as the number of branches, loan centers and ATM which allow the population to have access to products offered by the banking industry - Peruvian banks are estimated to double in size in the next five years (Rumsey, 2013).

GROWING DOMESTIC & FOREIGN INVESTMENTS OPPORTUNITIES

Our company deals in a business to business industry where we provide financial services to companies who are interested in starting a new business or expanding an existing one. Most investors have already been looking at emerging economies to invest in; this is causing an over investment in these types of countries. It makes much more investment sense to us to look at nations like Peru with a growing Commodity based economy. There is a big potential for a lot of global investments in this country because on its natural, mining, and power resources. Among different sectors, telecommunications attracted 28% of total foreign investment, followed by mining (20%), manufacturing (18%) and the financial sector (16%). Research also shows that as of 2006, a number of large Peruvian domestic companies have begun to invest abroad (OECD, 2008). The country's Ministry of Energy and Mines estimates that only 10% of the overall national territory with mining potential has been explored so far (Sotelo, 2010). This is attracting domestic and foreign investors to either start new competitive industrial businesses or partner with existing ones for expansion and growth both within the country and internationally. These are the type of business industries that our firm can service according to their specific business strategies. As identified in figures 2.1 and 2.2, domestic and foreign direct investments in Peru has experienced steady growth in both past and recent years and this trend is expected to continue to grow.

Figure 2.1 Figure 2.2